The Venetian Macao exterior
Sands China Ltd. said profit increased 3.3 percent as growth in mass-market gamblers partly made up for lower spending by high rollers.
The shares gained 0.7 percent to HKD42.55 at the close of trading in Hong Kong, after falling as much as 2 percent earlier. MGM China Holdings Ltd. gained 1.1 percent and Galaxy Entertainment Group Ltd. slipped 0.5 percent.
Sands China’s margins for lower-tier, mass-market gamblers remained high at more than 45 percent, Barclays Plc analyst Phoebe Tse wrote in a note yesterday, adding that management “mentioned increasing competition in the premium mass segment”. That’s impacting margins for this higher-spending group of gamblers, she said.
Sheldon Adelson, who controls Sands China, said this month that he expects VIP gambling business in the city to recover after casino revenue in the three months ended September fell 7.1 percent. Chinese players have been “staying below the radar” by avoiding Macau and not spending money in ostentatious ways, Adelson said.
China’s clampdown on corruption and lavish spending has hit the big spenders who contributed more than 60 percent to Macau’s gambling revenue. These high-rollers now look to bet outside the city, the only place in China where casino gambling is legal, boosting overseas casinos from Manila to Las Vegas.
Operators such as Sands China and Galaxy Entertainment Group Ltd. have allocated more resources to the premium mass- market gamblers who bet in cash and provide wider margins than high rollers. Such players don’t use junket operators, which charge companies a commission to bring them to Macau.
Casinos in Macau are also facing greater labor unrest and a profit margin squeeze as more employees join protests to demand higher pay and better welfare support.
Sands China’s third-quarter adjusted property earnings before interest, taxes, depreciation and amortization rose to USD811.6 million from a year earlier, according to Las Vegas Sands’ earnings statement, compared with the $799.3 million average of four analysts’ estimates compiled by Bloomberg.
Net income in the quarter at Sands China climbed to $644.6 million from $617.9 million a year ago, while net revenue fell 0.4 percent to $2.33 billion, according to the parent company.
SJM Holdings Ltd. dropped 1.4 percent, while Wynn Macau Ltd. and Melco Crown Entertainment Ltd. both declined 0.2 percent. The benchmark Hang Seng Index fell 1 percent. Vinicy Chan, Bloomberg
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